Central American & Caribbean

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  • EL SALVADOR: Coming under strain

    LatinNews 22 July 2011 Hits: 1764

    A very close eye needs to be kept on events in El Salvador over the coming days and weeks. The region was guilty of switching off when an institutional crisis unfolded in Honduras in early 2009, culminating in an unexpected coup in June of that year. Some of the same stresses and strains are being felt in neighbouring El Salvador right now. It would be a mistake to push the point too far – no two cases are entirely alike and there are important differences –, but there are several clear parallels with Honduras.

    Just as in Honduras the institutional crisis in El Salvador is, at heart, a power struggle. The country’s traditional political parties are running scared that a fledgling, reform-minded, constitutional chamber of the supreme court is muscling in on their patch, with a number of electoral reforms. In early June President Mauricio Funes signed a decree rushed through congress, curtailing the chamber’s powers by requiring it to issue unanimous rulings, which are unobtainable because one of the five magistrates is partisan. Funes has since sought to keep on the sidelines of the struggle as polls suggest the public is firmly behind the magistrates.

    In a bid to recover popular support, the left-wing Frente Farabundo Martí de Liberación Nacional (FMLN) is talking openly about reforming El Salvador’s constitution, including the seven so-called “untouchable” articles. It was the supposition by the Honduran reactionary economic and political elite that president Manuel Zelaya intended to reform similar articles (known as normas pétreas) in the Honduran constitution, above all the bar on re-election (which is the same in El Salvador), that lay behind the coup. These articles were approved by a constituent assembly and enshrined in the 1983 constitution drawn up under a right-wing government heavily influenced by the military. The problem is that the constitution does not establish any mechanism for forming a constituent assembly, which would be the only means of reforming these articles.

    The spokesman for the FMLN, Roberto Lorenzana, also the vice-president of the legislative assembly, said “we don’t think much of the normas pétreas, times change… and nothing is set in stone.” Funes has not lent his backing to the proposed constitutional reform, and will probably be deterred by both the legal complexities and the fiercely critical response of the right-wing parties in congress, not to mention the Honduran precedent. But, the standoff with the constitutional chamber of the supreme court remains: it is issuing rulings because it claims the decree requiring unanimous votes was unconstitutional, while the head of the official gazette, controlled by the executive, is refusing to publish them.

    Meanwhile, the president of congress, Sigfrido Reyes, a member of the FMLN party leadership, has proposed creating a constitutional court, which would be separate from, and indeed, more powerful than the supreme court. This proposal could be much more appealing to the right-wing parties in congress. In essence, however, it would constitute an autogolpe. The clear intention is to emasculate the constitutional chamber of the supreme court, and set up a more partisan court controlled by the legislative assembly.

    The Salvadoran foundation for economic and social development (Fusades) warned that “these developments present a grave challenge to El Salvador’s democracy, unprecedented since the Peace Accords of 1992. Civil society is behind the “Fantastic Four” (magistrates) but it is not clear that the political class is willing to accept an independent judiciary that will limit its power.”

  • NICARAGUA: The gloves come off

    LatinNews 22 July 2011 Hits: 1708

    President Daniel Ortega is “a national filibuster”. In Nicaragua this is the ultimate insult that can be flung at any politician, as it refers to William Walker, the US “filibuster”, who set himself up as president in Nicaragua after fraudulent elections in the nineteenth century, and has become synonymous with imperialist exploitation. Former president Arnoldo Alemán (1997-2002) officially launched his candidacy for November’s elections with this battle cry to stir up historical nationalism.

    Speaking at the annual convention of the Partido Liberal Constitucionalista (PLC), Alemán questioned the lack of transparency surrounding Ortega’s management of funds from Venezuela. Alemán was not deterred from attacking Ortega in an area where there is a gaping hole, not merely a chink, in his own armoury: Alemán embezzled an estimated US$100m while in office. Despite Alemán’s lack of credibility on the issue of corruption, there are concerns regarding the Ortega administration’s cooperation with Venezuela, which reached US$511m in 2010 yet remains strictly off budget.

    The other indirect criticism Alemán made of Ortega during the convention involved job creation. Alemán pledged to create one million new jobs if elected. Ortega set similarly ambitious (and unrealistic) targets. He cited figures from the Instituto Nicaragüense de Seguridad Social that 572,500 people were paying into the social security fund at the end of April 2011, up from 530,700 at the end of April 2010, as evidence that economic growth is generating proper jobs.

    Critics, however, have raised questions about Ortega’s figures. They cite contradictory figures from Paul Oquist, the presidential adviser on public policy, who claimed that Nicaragua created 325,000 new jobs between 1 January 2010 and the end of March 2011. The Fundación Internacional para el Desafío Económico Global (Fideg) also recently questioned the quality of jobs created, pointing out that those employed in the informal sector increased from 72% in 2009 to 75% in 2010.

    Electoral challenge
    Alemán also fired several verbal broadsides at Fabio Gadea, the presidential candidate for the Unidad Nicaragüense por la Esperanza. He realises that Gadea’s presence in the contest not only damages his own prospects of election but also seriously strengthens Ortega’s chances as it splits the liberal vote. The most recent survey, by pollster Siglo Nuevo, made Ortega the strong favourite to win re-election on 50.8% of the vote, ahead of Gadea on 17.4% and Alemán on 9%. The poll was commissioned by the Ortega administration so its reliability is questionable, but Gadea will have taken some comfort from it as it suggests that he, and not Alemán, is providing the main alternative to Ortega.

    Veteran Frente Sandinista de Liberación Nacional (FSLN) guerrillas have also lined up to take pot shots at Ortega, as the Sandinista revolution turns 32 years old. “This is a government of savage capitalism… dressed in leftist garb,” Mónica Baltodano, one of the famous FSLN guerrilla commanders that toppled the country’s dictator, Anastasio Somoza, in 1980, told the foreign press.

    “This has nothing to do with a revolution; it is the continuity of neoliberal policies of previous governments, with the added ingredient of authoritarianism and democratic backsliding,” Baltodano, the leader of the dissident Movimiento por el Rescate del Sandinismo, went on. She added that at least the three neoliberal presidents before Ortega had accepted the principle of alternation of power (see sidebar).

    • Microfinance law

    Nicaragua’s congress passed a law in June regulating the microfinance industry, in line with demands from the IMF. While providing for greater transparency regarding commissions and other fees, the law did nothing to cap interest rates. The law was also criticised for failing to include Alba-Caruna, a savings and credit cooperative closely linked to the FSLN, which is funded with money from the Venezuela-led Alba integration movement.

    • Controversial law

    The supreme electoral council (CSE) has approved an ethics code for the forthcoming elections, prohibiting the media from publishing “distorting propaganda” and making it an electoral crime for candidates to defame the CSE or their rivals. An opposition presidential candidate, Fabio Gadea, said the ethics law was clearly “a muzzle” preventing anyone from criticising the politicised CSE. Others questioned why the ethics law made no mention whatsoever of barring state institutions from putting out propaganda in favour of President Ortega’s re-election.

  • TRACKING TRENDS

    LatinNews 22 July 2011 Hits: 1540

    NICARAGUA | Private pressure. President Daniel Ortega faces a challenge other than that posed by his political opponents ahead of general elections in November. The harmonious state of relations he has managed to maintain with the powerful private sector lobby (despite his radical leftist rhetoric) is at risk, amid renewed unrest from the so-called ‘No Pago’ (no pay) movement, comprised of medium-sized producers demanding the renegotiation of defaulted loans.
        Ortega has hitherto preserved ties with big business as a result of booming exports and foreign investment receipts, and his refusal to touch tax reform. On 12 July, the private sector lobby, Consejo Superior de la Empresa Privada (Cosep), and the national microfinance association (Asomif) issued a joint statement demanding a “firm response” from the government in relation to a revival of unrest staged by the ‘No Pago’ movement across the country over the past month.
        Initially stirred up by Ortega himself in June 2008 when he backed protests by debtors against the micro-finance institutions (MFIs) – although he has since distanced himself from this stance –, the main complaint of the ‘No Pago’ movement is that MFIs, whose gross loan portfolio is some US$538m, including funds from savings and credit cooperatives, according to a 2011 report from the think tank Funides, charge interest rates that are too high, leaving borrowers swamped by unmanageable debt.
        According to a leader of ‘No Pago’, Omar Vílchez, 13,758 debtors owe US$43.9m of overdue debt to the Nicaraguan banking system. One of his proposals is that those who owe more than US$10,000 (1,788 people, whose total debts come to US$24.5m) should have their debts restructured at a “symbolic rate of interest” over a 10-year period.
        The Asomif-Cosep, however, complain that since 2008 uncertainty caused by the actions of ‘No Pago’, together with the economic crisis, resulted in losses of US$80m from foreign donors. They argue that a further US$300m earmarked for the current agricultural cycle is currently at risk.

    COSTA RICA | Chinchilla’s challenge. President Laura Chinchilla has admitted that the Caja del Seguro Social (CSS), social security fund, faces an unsustainable financial crisis. Her comments came days before an indefinite strike began on 19 July in the medical sector as hospital staff, as well as community clinics, protested against cuts in disability pay.
        It is the first labour dispute Chinchilla has faced since taking office in May 2010. Union organisers insist that the strike will continue until the government meets their demands. The government insists that the CSS, which is funded by employee, worker and state contributions, needs urgent reform, primarily because the government is cash-strapped and running a fiscal deficit which looks set to exceed 5% of GDP for the second straight year.

    REGION | Remittances. Remittances increased 9.5% in the first half of 2011 on the same period last year to US$2.18bn, according to the central bank (Banguat). The president of Banguat, Edgar Barquín, predicted that remittances would break all previous records and reach US$4.5bn in 2011, surpassing the US$4.32bn recorded in 2008 before the onset of the global economic slowdown.
        El Salvador, meanwhile, received US$1.81bn of remittances from expatriates in the first half of 2011, up 4.3% on the same period in 2010, according to the central bank.

    CUBA | Restrictions. Private businesses, or the so-called cuentapropistas, self-employed Cubans, in the historic centre of Havana will have to pay a tax towards the preservation of the designated World Heritage Site, according to a new decree published by the Cuban government in the official gazette. The size of the tax will be set shortly by the finance ministry, and will be payable either in Cuban pesos or convertible pesos.
        The state planning institute is considering setting up bazaars, as the number of cuentapropistas grows, to ensure that the physiognomy of Havana, and other cities, is not fundamentally altered by private stalls setting up wherever they choose. They will also have to acquire a licence from the Oficina del Historiador de La Habana (OHCH).